The squandering of precious foreign exchange on the import of luxury items is baffling. The ostentatious lifestyle of the elite class is ruining the economy. Because of liberal import policy, where all kind of stuffs are permitted to be imported, the country is currently dealing with the highest current account deficit of $8 billion. Preference of foreign goods over local manufactures exhibits a strange mindset of the rulers. India’s and the US respective slogans of ‘Make in India’ ‘America First’ are huge contrast to the approach of our government.
Back in 1999, the country was close to a financial default as the reserves had plummeted to an all time low. If the current trend continues, the same economic mayhem will become inevitable. The government is borrowing as much money as possible to bridge the current account gap. The country has been pushed into a serious debt trap while the free reserves of the State Bank have fallen to just over $16 billion and the decline is continuing. The rupee is under tremendous pressure but the float is being managed. A hefty devaluation is expected in 2018 with a return to the IMF on account of the worsening economic situation.